Make the Most of Your Mountaineers Donation

The Mountaineers is a 501c3 nonprofit organization, and we rely on the support of our members to further our mission. You can make the most of your donations by understanding the ins and outs of tax rules for donations to nonprofits.
Tom Vogl Tom Vogl
Mountaineers CEO
June 25, 2018

The Mountaineers rely on the generosity of its donors to fulfill our mission. While revenues such as book sales, course fees, and membership dues contribute greatly to our success, philanthropic donations support about 15% of our annual budget. Individuals, foundations, and companies give to The Mountaineers because they’re inspired by our deep commitment to connecting people to the transformative power of wild places. You can make the most of your donations by understanding the ins and outs of tax rules for donations to nonprofits.

Here are ways to maximize your financial impact:

Donor Advised Funds

More and more people are using a Donor Advised Fund (DAF) to maximize their gifts to nonprofit organizations. A DAF is a philanthropic fund which allows individuals to make charitable contributions, receive an immediate tax deduction, invest and grow the money over time, and allocate grants to specific nonprofits. Most individual financial brokerages can help set up a DAF.

One of the benefits of using a DAF for philanthropic contributions is the ability to easily contribute appreciated securities like stocks or mutual funds without paying a capital gains tax. Incoming Board Vice President, Vik Sahney, is a fan of DAFs for this reason. “With stocks up so much in the past year, you can donate your most appreciated assets. This means you reduce your taxes AND the charity you give to can get a larger donation.” It’s a win-win.

For many people, DAFs are easier than donating directly, and using them to donate reduces costs for nonprofits. Vik agrees. “Traditionally I would donate online or at an event via a credit card and the cards then took a 1-3% fee off the donation. While I knew I could donate appreciated securities, the process for doing so was time consuming and different for each nonprofit. I was looking for the ‘easy button.’ DAF’s are it!”

Recent changes to the U.S. tax code have made Donor Advised Funds even more attractive for many people. “My wife Ann and I have been using a DAF for all our charitable contributions for almost a decade and it provides significant benefits for tax planning,” said Board Member Steve Swenson. “Those benefits for how we do charitable giving have become even more significant given the new tax law provisions.”

Under the new tax law, the standard IRS deduction has increased to $12,000 for individuals and double that for couples, making itemized deductions obsolete for some taxpayers. Using a DAF can resolve the dilemma faced by those donors whose itemized deductions are less than the new standard deduction.

“Bundling contributions in one year can make a lot of sense,” says Steve. “For example, you could make a bigger contribution to a DAF in 2018 that exceeds the standard deduction so you would benefit from itemizing. In 2019, taking the new, larger standard deduction might make more sense. That year you could still make donations to your favorite charities from your DAF.” By “bundling” charitable contributions with a DAF, taxpayers may be able to reduce their tax obligation while making more funds available for their favorite nonprofits.

Qualified Charitable Distributions of IRAs

Retirees may also be able to stretch their donations further by using a “Qualified Charitable Distribution” from their Individual Retirement Account (IRA). The Internal Revenue Service has a rule that requires people who have reached the age of 70-1/2 to take a minimum distribution from their IRA each year — this is called a Required Minimum Distribution (RMD). Some people don’t have the need to withdraw the full RMD amount in a given year so using a Qualified Charitable Distribution allows them to make a donation to a nonprofit from their IRA without incurring the tax liability.

According to the IRS website, “...your qualified charitable distributions can satisfy all or part of the amount of your required minimum distribution from your IRA.” In simple terms, this means that people older than 70-1/2 may make a charitable contribution from an IRA and satisfy their Required Minimum Distribution amount without reporting additional income. Using the Qualified Charitable Distribution may allow you to donate to worthy causes you believe in while minimizing your tax bill.

Most financial advisors can set up Donor Advised Funds and Qualified Charitable Distributions or can point you in the right direction. These strategies benefit many donors yet may not make sense for everyone, so it’s important to discuss your specific situation with a qualified tax and/or financial advisor.

Thinking of donating to The Mountaineers?

Your support will help enable and inspire people to get outside, connect with the natural world, and engage in its stewardship and protection. Learn more on our donate page  or contact Amber Carrigan, The Mountaineers Development Director, at 206-521-6004 or amberc@mountaineers.org.

The Mountaineers is a 501(c)(3) nonprofit organization.
Tax ID: 27-3009280.

 


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